But the 15-year FRM increased by one basis point to 5.16% from last week's 5.15%. At the same time last year, the 15-year loan averaged 6.72%.

"Given the downward trajectory of rates, refinance activity continues to pick up, creating opportunities for many homeowners to trim their monthly mortgage payment," Sam Khater, Freddie Mac's chief economist, said in a press release. "Meanwhile, many looking to purchase a home are playing the waiting game to see if rates decrease further as additional economic data is released over the next several weeks."

But Redfin's own data indicates that following last week's Federal Open Market Committee 50 basis point reduction in short-term rates, consumers are jumping back into the purchase market.

Its Homebuyer Demand Index — which measures tours and other services offered by Redfin agents — rose to its highest level since May during the week ending Sept. 22, with a 7% month-to-month gain and a 1% annual increase, the first in nearly a year.

"One new client decided to start their home search last Thursday because of the Fed's rate cuts on Wednesday," said Andrew Vallejo, a Redfin agent in Austin, Texas, in a press release. "Rate cuts have sparked more showings; we're seeing all of our listings in the area get more traffic."

The 10-year Treasury was 6 basis points higher from the prior week at 11 a.m. on Thursday, at 3.80%, only the second time since Sept. 4 it has been at or over that point.

Mortgage rates increased 16 basis points from last week, according to Zillow's rate tracker. As of 11 a.m. on Thursday morning, the 30-year FRM was 5.79%, versus the prior week's average of 5.63%.

But Lender Price product and pricing engine data posted on the National Mortgage News' website put the 30-year FRM almost back to where it was two weeks earlier, 27 basis lower at 6.121% at that same time on Thursday morning, compared with 6.391% seven days prior and 6.105% on Sept. 12.

The Mortgage Bankers Association's Weekly Application Survey rate tracker released on Wednesday has declined for the past two months. Applications hit a two-year high but purchase volume is up 2% year-over-year.

"Mortgage rates have now declined for eight consecutive weeks, and we expect that these lower rates will entice more prospective buyers to enter the housing market this fall," a Thursday morning comment from MBA President and CEO Bob Broeksmit said.

In a downward revision of its mortgage forecast for the next two years, iEmergent said it expects lower-than-anticipated growth particularly for purchases, while refinance volumes are projected to rise due to a gradual decline in interest rates.

Even with the decline, rates are expected to remain at elevated levels compared with recent norms, and buyers will still be dealing with affordability issues.

"The economic boon of the Covid-era refinance boom has been underappreciated in its impact on keeping interest rates higher for longer than anticipated," said Mark Watson, chief economist at iEmergent in a press release. "While this has helped maintain economic strength, it has also suppressed mortgage origination volumes."

Purchase loan count should drop compared with 2023, though an increase in average loan sizes will lead to a 3.5% rise in dollar volume, iEmergent predicts. Refinance originations should rise 48% from their 2023 lows as mortgage rates drop, Watson said.